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WEEKLY SCRAP WRAP: Turkish demand boosts global scrap prices

Strong demand from Turkey, the world’s largest scrap importer, raised global scrap prices sharply during the working week from Monday August 7 to Friday August 11.

Turkish steel mills have booked seven deep-sea cargoes this
week, totalling 230,000 tonnes, and the prices have increased
rapidly to historically high levels.

Turkey imports
Turkish steel mills paid higher prices for scrap every other
day this week as the demand for finished steel, especially in
the domestic market, supporting strong costs.

The daily scrap indices reached their highest levels since
September 26, 2014, with news of fresh cargoes sold at the end
of the week.

A steel mill in the Iskenderun region booked a European cargo,
comprising 20,000 tonnes of HMS 1&2 (75:25), 9,000 tonnes
of shredded, 8,000 tonnes of a mixture of HMS 1 and P&S,
2,000 tonnes of busheling and 1,000 tonnes of tin-can bundles,
at an average price of $354 per tonne, on August 11.

Another steel producer in the Iskenderun region booked a US
cargo, comprising HMS 1&2 (80:20) at $353 per tonne,
shredded at $358 per tonne and bonus at $363 per tonne cfr on
August 10. However, the tonnage breakdown was not clear at the
time of publication.

The same mill also booked a New Zealand cargo, comprising
11,000 tonnes of HMS 1&2 (80:20) at $354 per tonne, 6,000
tonnes of shredded at $359 per tonne and 13,000 tonnes of bonus
at $364 per tonne cfr, also on August 10.

A steel producer in the Marmara region booked a European cargo,
comprising 20,000 tonnes of HMS 1&2 (75:25), 10,000 tonnes
of shredded and 5,000 tonnes of P&S, at an average price of
$340 per tonne cfr.

A steel producer in the Marmara region booked a Baltic Sea
cargo, comprising 21,000 tonnes of HMS 1&2 (80:20) at $340
per tonne, 3,000 tonnes of shredded at $345 per tonne and 4,000
tonnes of bonus at $350 per tonne cfr, on August 9.

A steel mill in the Izmir region booked a UK cargo, comprising
16,000 tonnes of HMS 1&2 (80:20) at $333.50 per tonne and
6,000 tonnes of shredded at $338.50 per tonne cfr, on August
8.

Another steel mill in the Marmara region booked a European
cargo, comprising 20,000 tonnes of HMS 1&2 (75:25), 5,000
tonnes of 4A-grade new automobile factory bales, and 10,000
tonnes of P&S, at an average price of $336 per tonne
cfr.

Market participants were expecting prices to rise even further
because of the strong markets for billet and finished
steel.

"The international billet [markets are] very firm right now.
People are concerned that prices in Turkey were overheated but,
if China moves up, they will have to follow," a trading source
said.

"The market is crazy. Turks bought scrap from New Zealand,
which is extremely unusual. People expect prices to go up to
$370 per tonne cfr for HMS 1&2 (80:20)," a Turkish source
said.

"Domestic rebar demand is strong and prices are still
increasing," another Turkish source said. "I think we will see
further increases in scrap prices."

USA exports
The US scrap market was also enjoying the rising prices in
Turkey over the past week.

The US ferrous scrap bulk export market paused until Friday,
when a Turkish cargo broke the silence, but recent sales by
Turkey and global dynamics are both working to bolster hopes
that sales from the US domestic market will soon resume.

An export source indicated that the recent run-up in prices is
probably not finished, because coking coal and iron ore prices
are rising and Turkey cannot rely on expensive billets to
supplement its melting needs, which would lessen its dependence
on scrap.

Chinese billet prices are now being quoted at $515 per tonne
fob, another export source said, adding that prices for billet
were not an option three weeks ago when they were selling for
$470 per tonne.

Taiwan imports
Taiwan’s import prices for containerised HMS-grade
ferrous scrap have risen by $5-15 per tonne over the
past week, as the local mills have accepted the higher offers
heard earlier.

The increases followed the dynamics in the key market of the
world’s largest ferrous scrap importer,
Turkey.

The higher imported scrap prices in Taiwan initially met with
customer resistance because of the weak domestic demand for
rebar.

"Demand for rebar is so-so in Taiwan. There is not enough
government investment in construction," one trader said.

"The producers have tried to relay their raw material price
rises to their end-users. But the rises happened too fast in
rebar, so the buyers are in wait-and-see mode," another trader
said.

Two large buyers have reported making purchases of USA-origin
HMS 1&2 (80:20) at $285 per tonne cfr Taiwan.

Information about deals at prices between $295 and $290 per
tonne cfr Taiwan was also circulating in the market. Offers for
USA-origin HMS 1&2 (80:20) were reported at $295-298 per
tonne cfr.

Meanwhile, Taiwan’s domestic rebar offers were
said to be NT$15,100-15,200 ($498-501) ex-works this week, up
by NT$300-400 ($10-13) week-on-week.

India imports
The Indian steel scrap import market has moved higher this
week, with both prices for HMS 1&2 (80:20) and shredded
material increasing in line with surprisingly strong
competition from Turkey, as well as firm steel export demand
for billet and rebar in the markets in Southeast Asia, such as
Indonesia and the Philippines.

Indian import prices for HMS 1&2 went up by $5 per tonne at
the top end to a new range of $290-300 per tonne cfr Nhava
Sheva, while shredded prices were up to $323.28 per tonne, from
$317.60 per tonne a week ago.

UK shredded scrap offer prices were as high as $310-330 per
tonne amid keen demand from Turkey for British scrap, which has
prompted increased domestic sales prices in the UK, sources
said.

A clearer direction for import prices to the country should be
seen at the end of August or early in September, market
participants said.

That is when the current shipments in transit are expected to
arrive, and domestic steelmakers in India should reveal their
raw material needs for their fourth-quarter production
schedules, Metal Bulletin has learnt.